For many, one of the most stressful elements of being in debt or insolvent is harassment from collection agency calls, or creditors threatening to pursue legal action against you. Perhaps a creditor is trying to garnish your wages, and you are not sure what to do next. When debt becomes overwhelming and you are being contacted by creditors frequently, it is important to remember the situation can be easily resolved. The best thing to do is first speak to an experienced Licensed Insolvency Trustee, who will be able to provide the most informed advice for you. At Spergel, we have helped over 100,000 Canadians become debt free and we can help you too. In this article, we will share how to stop creditors contacting you, and explain ‘what is a stay of proceedings’.
What is a ‘stay of proceedings’?
In Canada, a ‘stay of proceedings’ is automatically instated when filing a consumer proposal or bankruptcy. It stops creditors from pursuing you for any money owed. Although it must be triggered by filing one of the two legal forms of debt relief, a stay of proceedings is a crucial feature for many in itself. In fact, harassing collection agency calls and legal action threats are often the main driver for people to file bankruptcy. A stay of proceedings will therefore put an end to creditors contacting you for any money owed, because they will simply no longer legally be allowed to. While creditors can understandably want to contact you to get their money back, if you are unable to pay them, a stay of proceedings is a means put in place to ease the pressure. Learn more about how to stop a wage garnishment.
How does a stay of proceedings work?
If you are struggling with overwhelming debt, book a free consultation with a Licensed Insolvency Trustee at Spergel. As all trustees are trained in all forms of legal debt relief, they can help you to determine the best pathway for you. They will discuss your financial circumstances with you, and determine any alternatives to bankruptcy. If it seems you need a stay of proceedings, when you file bankruptcy or a consumer proposal your trustee will inform the courts and any creditors that you have filed. This is a key role of a bankruptcy trustee. From this point forward, a stay of proceedings is in place and no further legal action or contact can be made from creditors throughout your bankruptcy or consumer proposal. A stay of proceedings is applicable even if you have been taken to court by a creditor. From this point forward, the court order will be stopped.
What does a stay of proceedings stop?
Whether you are facing threats from a creditor, or you have been sued, filing a bankruptcy or a consumer proposal will guarantee you protection from creditors and collection agency calls. A stay of proceedings will protect you from the following:
- Calls from collection agencies
- Wage garnishments
- Threats of legal action from a creditor
- Any documents filed with the court by a creditor
- Any legal action already underway
- Any judgements you may have received from the court if sued
- Enforcements of Court Order
What can a stay of proceedings not stop?
There are a few exceptions that a stay of proceedings is not able to cover. This includes contact and lawsuits regarding the following:
- Orders to pay child or spousal support
- Debts not included within the Bankruptcy and Insolvency Act
- Fines and penalties
- Support payments
- Fraud debts
- Restitution orders
- Student loan debts (if you left school within the last seven years)
- Car loan debts
When does a stay of proceedings end?
A stay of proceedings will end once your consumer proposal has reached the end of its term, or once you have been discharged from bankruptcy. This should not be something to worry about, however. Typically, any debt you have filed as part of your consumer proposal or bankruptcy will have been cleared. You can find out more about the debts included in bankruptcy. This means that your creditors will no longer be seeking their money and there will no longer be any reason for them to speak to you. Learn all about life after bankruptcy or life after filing a consumer proposal. The only exception to having protection from your creditors is if a creditor were to apply to the court to have it lifted. This is a rare event, but should this happen, your trustee will advise you every step of the way.
Can a stay of proceedings stop the CRA?
Even if you owe government taxes, a stay of proceedings applies to any income tax debt you might have incurred. Should you file bankruptcy or a consumer proposal, your Licensed Insolvency Trustee will inform the Canada Revenue Agency (CRA). The CRA will then have to stop contacting you or pursuing action against you as other creditors would too. A stay of proceedings will also halt any bank account freezes or wage garnishments from the CRA. If you are struggling with debts, it is always a good idea to protect yourself by taking action and speaking to a bankruptcy trustee before action is taken against you. Do not take the risk of having a lien placed on your property by the CRA if you do not get a stay of proceedings soon enough. The faster you act, the better.
In need of a stay of proceedings? If you are suffering with overwhelming debts and are being contacted by creditors, book a free consultation with Spergel. Our experienced bankruptcy trustees have been helping Canadians become debt free for over thirty years. We can help you take the right course of action to gain debt relief, free from the pressures of creditors.